Second rate cut needed to help mortgage market: CBA's Ralph Norris

The Reserve Bank will need to cut interest rates a second time for the mortgage market to fully recover, says outgoing Commonwealth Bank CEO Ralph Norris.

Norris says mortgage lending increased in the lead-up to the RBA’s 0.25% cash rate cut on Melbourne Cup Day and further cuts would help encourage that trend.

Norris says while demand for loans is sluggish as consumer and business confidence remains shaky with the global economic slump, the home loan market is showing early signs of improvement.

“We are starting to see in this quarter that the mortgage market is a little more active,” he says.

“It is a little early to say if it is purely seasonal or if there is some impact from the recent rate reduction.

“But typically, we would expect that really to be supported by a second rate reduction to see a bounce [in the mortgage market].”

He stopped short of demanding these cuts, saying the governor of the Reserve Bank is “more than adequately qualified to make that those calls”.

The November 1 rate cut to 4.5% was the first reduction by the RBA since 2009.